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Syndication roundtable 2003

Jan 13, 2003  •  Post A Comment

Dick Robertson: President of Warner Bros. Domestic Television Distribution
Greg Meidel: President of programming, Paramount Domestic Television
Roger King: CEO, CBS Enterprises and King World Productions
Sean Perry: Head of alternative programming, Endeavor Talent Agency
John Weiser: Executive VP, Sony Pictures Television
In last week’s first part of our annual syndication roundtable, some of the biggest names in the business got into a hot and heavy conversation about vertical integration and its effects on the syndication marketplace.
Part 2 is equally compelling with additional conversation about vertical integration as well as the dilemma stations often face and the question of advertising.
Electronic Media asked five heavyweights to join us in this year’s roundtable discussion to talk about the current crossroads in syndication. They were: Roger King, CEO, CBS Enterprises and King World Productions; Greg Meidel, president of programming, Paramount Domestic Television; Sean Perry, head of alternative programming, Endeavor Talent Agency; Dick Robertson, president of Warner Bros. Domestic Television Distribution; and John Weiser, executive VP, Sony Pictures Television.
Doing the questioning were EM Senior Editor Chris Pursell and EM Publisher and Editorial Director Chuck Ross.
(Continued from last week)
Electronic Media: Is it necessarily good for the syndication business to have all this consolidation on both sides of the table?
Roger King: If you have a hit, I don’t care what company owns your station, you’re gonna look at that hit. I mean we’re coming out with a ‘CSI’ weekend [barter] situation. And Fox is interested in talking to us, and we don’t sell to Fox very much. But you know, they’re going to look at a Warner Bros. hit and they’re going to look at Columbia’s ‘Spiderman.’ And they’re going to look at [a show] if you have the hit.
Dick Robertson: Yeah, I’m just saying back, lo those many years ago, when you started your company and me and my partners started our company. I don’t think we probably could have done that today. Maybe it wouldn’t be impossible but it would be pretty darn impossible. You would have never had a ‘Dr. Phil’ if you weren’t already in business.
Mr. King: But what I’m saying is that if you have association with Dr. Phil personally you could have built a company around Dr. Phil.
Mr. Robertson: I’m saying Dr. Phil would never have selected you as a brand-new company.
Mr. King: When I went to my first NATPE, I used to be in amazement to see all the people going into your suites, and Paramount. I mean, the line for the food alone.
Mr. Robertson: And you know, we were selling some little pisher package and we would grab all the clients coming by. And every now and then we’d make a sale. That’s what you do when you’re zigging when everybody else is zagging. I’m just saying I think it would be almost impossible to replicate that today given the consolidation. That’s all I’m saying.
John Weiser: At the end of the day, even with vertical integration, it’s in the station’s best interest to have as many choices as possible so they can program shows. A show for an NBC station in one market is much better suited for an ABC station in another market, depending on the other product they have and the lead-in and the strength of their newscast. So what’s best for the station community out there is to have multiple choices and to keep companies like ours alive, because that’s going to give them the opportunity to program their station locally most effectively.
EM: We’ve talked to a lot of stations, probably some of the ones that you were talking about, who have been completely frustrated because they don’t feel empowered to make their own program-buying and scheduling decisions. What do stations have to do stand up for themselves?
Mr. Robertson: Yes, what does a program manager do at a television station in America today? What he does is schedule. He or she is a scheduler and basically a promotion manager.
Greg Meidel: Roger used to be able to go into a top 25 market and deal with the program director and get a decision. And those days are over.
Mr. Weiser: What, one person or two people buy for Sinclair and they have 65 television stations?
Mr. Robertson: That’s pretty much true. It’s pretty much true at all those groups.
Mr. Weiser: But 65 stations are being programmed by one or two people? That’s pretty amazing.
EM: A lot of people in the industry have been telling us that the threshold for success is now considered a 2.0 rating. Roger, ‘Dr. Phil’ shattered that threshold. Is there a threshold anymore? What does it take?
Mr. Robertson: I think the threshold is initially did you meet or exceed the lead-in share? And did you meet or exceed the time period rating from last year, which is not a very high hurdle. Because presumably, if you’re a new show, you’ve replaced something that wasn’t working. So you’re comparing yourself to something that wasn’t all that great to begin with. Having said that, of all the new shows that premiered this year, only one of them, ‘Dr. Phil,’ met or exceeded its time period share. And only one of them improved-‘Dr. Phil’ improved last year’s time period. Every other one …
Mr. Meidel: The second-highest-rated new talk show is doing a 1.2, a 1.3 …
Mr. Robertson: One, two, three, four, five, six, seven, eight, nine. The other 10 shows have all …
Mr. Meidel: … Forget it.
Mr. Robertson: … have all, by a fairly wide margin, not met their lead-in share and are fairly far behind last year’s time period share, which was nothing to write home about in the first place, because it replaced a show that probably wasn’t working. So the class of, so far, of 2002-2003 is …
Mr. King: I’d like to make a statement on that because I have a real strong opinion. You’re 100 percent right, Dick. The crop [of shows] wasn’t very good, OK. And the audience told you that. But if you look at what’s going on with network television, in the last few years I have seen more major stars, better programming than I’ve seen in years on the network. That’s because the network used to slap things on the air. But now you see ’24’ with Kiefer Sutherland, ‘CSI’ and ‘CSI Miami.’ [They’re into] bigger stars. Look what you’re doing with ‘Friends.’ I mean it’s pretty remarkable. Guest appearances with Brad Pitt, and I think network television, for the first time since I’ve been watching in the last 10 years, I’d say the last 3 years has really been a lot better. And subsequently, you’ve had more hits. And if you look at syndication, well, syndication was a self-fulfilling prophecy. I mean just to go get a star and say that you can do a talk show is absurd. I’ve tried it and it’s failed. It failed, it failed, it failed.
But I think that it’s breaking down syndicators and studios. I mean you’re a wealthy studio. For you to be complaining right now, and you’re such a wealthy company, I’d say that there’s something wrong here.
Mr. Robertson: What do you mean ‘complain’? I’m not sure I understand your point, Rog.
Mr. King: The point is that if you look at the crop of shows on the network, I think they’re better. I think you’re part of that [at Warner] and I think Columbia is part of that and I think Paramount is part of that. Then if you look at syndication, I don’t think it’s very good. I think what happened with the crop of 2002 and the crop of 2001 and some of the [shows] still on the air [is that they’re] not very good television.
Mr. Meidel: I actually saw someone in the trades bragging about having the No. 2 talk show on the air with a 1.2 or 1.3 [rating]. I wouldn’t be bragging about that. I mean to me that’s not much to get excited about.
Mr. Robertson: In the valley of the blind, the one-eyed man is king.
Mr. Perry: I think you also have to determine what your expectation of success is. There’s no doubt that we all would like to have ‘Dr. Phil.’ Roger’s going to go make $100 million-plus worth of deals by the time this call is over. But if you look out there and say ‘Blind Date,’ that is done for a reasonable amou
nt of money. They’ve got double runs; they made a deal with TNN, which is reported in the $20 million range. Those numbers are something that will not compare to ‘Phil,’ but it’s a success. And you look at what they’re doing at Warner Bros. with ‘Elimidate,’ which is done very cost-effectively. It has really grown. That is considered a success for two reasons. One is the amount of cost vs. the amount of money they bring in. And secondly, what Dick said is what did the time periods do a year ago? How are they doing [following] their lead-in? And I think that we have to really decide, all of us, when we go out with a show, is where are you going? Are you going to take that big-ticket risk like a ‘Dr. Phil’? Or are you saying you are just going to play the numbers game-to produce it cost-effectively so that at a 2, which is what the time period did a year ago, you’re making money.
Mr. Meidel: This is when you have an opportunity to put your creative hats on and really try to come up with something that is original or something that can be cost-efficient and in a daypart where [it makes sense]. [For example], I don’t see a lot of improvement in license fees from 9 a.m. to 3 in the afternoon.
Mr. Robertson: All you’ve got to have is a show that two stations want in the same market and the entire problem corrects itself-and that is a successful show.
Mr. Meidel: See, that’s really where our business is better than the networks.
Mr. Robertson: What we’re talking about is there’s two businesses here. We’re talking about getting new product on the air. It’s very difficult. And getting them on the air under any kind of financial scenario that makes any kind of sense is almost impossible these days.
Mr. Weiser: If you want to create a hit, though, developing and capitalizing on a big brand increases your chances dramatically. And whether you incubate that in an ‘Oprah’ show or you put it on the network first and bring it off a network, [it] increases your chances.
Mr. Robertson: But let me try and figure this out. Roger, help me out with your point here. You’re saying that network television seems to have been improved over the last couple of years. But the programming in first-run syndication hasn’t. Is it a function of the resources given the rewards? Or what are you saying the problem is?
Mr. King: I don’t think it’s about reward. I think if you get good at something, and this is real simple, the money will follow. I don’t care who you are or what company you work for. And I think that the crop of shows were not very good.
Mr. Robertson: But with all due respect, network shares, the four network shares, every year have been going down. You know, it is what it is.
Mr. King: But network shares are not going down on ‘CSI.’ And it’s not going down on ’24.’
‘Friends’ is a huge hit. You can’t always look at the 75 failures, because the networks collectively spend upward of a billion dollars a year on failures. Not on hits but on failures. And it’s very frustrating, Dick, to think that you’ve got a real good show. And you go out and you run into this brick wall called Fox that’s controlling two stations in L.A. …
Mr. Robertson: … And New York and Chicago.
Mr. King: It’s a very difficult process.
Mr. Robertson: Well, this is what I’m talking about.
The three defining issues today are duopolies, particularly now in the big cities; vertical integration-our biggest customers are our biggest competitors; and the cap, you know, 35 percent going to who knows? Maybe infinity, or 50 percent.
It just means that all of the leverage … AOL Time Warner is a pretty big company [but] all of the leverage has moved to the buy side of the desk.
Mr. Perry: What’s interesting is that I don’t think, and I’m speaking on the agent’s side, whether the cap is 35 or 50, you’re not gonna change the way you develop your shows. It is going to, in the end, change your deals. Because now that person, Mitch [Stern] Jay Ireland, Dennis Swanson, they’re more powerful and they can say, ‘This is how we want the deal.’ So they’re going to remain more powerful.
Mr. Robertson: It is what it is. And nothing that anybody says here at this table is going to change that fact.
EM: I’m going to move the discussion to another point that Chris wanted to bring up, which is about advertiser perception of syndication. We now have Gene DeWitt in place at the Syndicated Network Television Association, and it’s interesting because Sony obviously is not part of that group. I think the other people here at the table are. Could we talk a little bit about advertiser perception of syndication? You know, where that is right now. Maybe we could have Mr. Weiser talk a little bit about why Sony hasn’t joined SNTA. And obviously, from the other gentlemen here, what you hope to get out of SNTA. Obviously, they’re going to have their event coming up in the early part of the year. Mr. Weiser, you want to start first with why you didn’t join it?
Mr. Weiser: Yeah, when Steve Mosko got back involved with ad sales for our company, the top priority was to create awareness and value for syndication with the advertisers. We invested a substantial amount of resources in creating a presentation and an advertising campaign about how syndication works. And we’ve been out on presentations for well over a year with it. So when SNTA kind of was created and moved down that path, we were already well down our path. They are very consistent goals. Everyone wants the same thing. We want the advertisers to recognize and value syndication. And just because we’re headed down our own road, we wish well to SNTA. And maybe having more than one group go in and talk to these advertisers may get the job done.
Mr. Robertson: First of all, let me just clear something up. SNTA represents a number of syndicators, most everybody. They don’t go represent Warner Bros. or Paramount or anybody exclusively. We had the very first full-time development sales executive of any media company in New York, calling on planners and clients for the last two years. We’ve had a full-time person working in our cross-media division with the other AOL Time Warner properties. We are a big supporter of the original ASTA and then the SNTA and also the new, revitalized SNTA. So we’re out there calling on clients and buyers every day with people, with all of our account executives. And we still feel it’s important to be a part of SNTA, to speak with syndication as one voice. And we really, really, really hope that someday our good friends at Sony will come and join us. We would love to have them be part of our team. I think [Gene DeWitt, president of SNTA is] one of the brightest people I’ve ever known in advertising in New York. That was my background before I got into syndication. He’s so well known and well respected. He ran BBDO and then ran his own business for a number of years, and he so gets it. We have really lost our way in syndication. We went through the ’90s, this unprecedented growth in America in prosperity. And syndication-we just couldn’t get out of the way of the money. And the year 2000 was the biggest wake-up call in the history of business that I’ve ever seen. The industry was off a massive amount. It’s gonna take us a couple of years to get back to where we were. And it was a wake-up call, and I’ve got to give my friend Joel Berman at [Paramount] a great deal of credit, because Joel and Janice Marinelli [president, Buena Vista Television]-and many other people-but they seemed to be two of the real leaders in trying to re-energize SNTA and let’s all get together and talk about it. Because man, we got whacked.
EM: Well, what happened? Why?
Mr. Robertson: It’s hard to say. I think we just took it for granted, to tell you the truth. I think we took all this business for granted. We had double-digit growth for 10 years in a row. And cable was growing and it was a confluence: Business got soft, there weren’t any new hits, and cable’s rates were attractive. And the networks got more price-effective. And we wound up being the odd person out, to a relatively large extent. And I’ve never s
een anything like it before.
So we started digging ourselves out of this hole, and we’re well on our way back. But our problem in syndication is with the planning community. These young people at the agencies and at the clients who plan media don’t really understand syndication. And the agencies that get it, get it really well and use it effectively. It’s a tremendous cost-effective tool. There is nothing that can create reach for the price that syndication can-nothing. And we have done such a poor job. I even told the SNTA committee that if I had lived in New York, that was a job I could ultimately see myself having someday, because it’s such a great story to tell. The value proposition is so strong in syndication.
EM: Hasn’t one of the problems been the syndicators’ own fault by overpromising ratings?
Mr. Robertson: No, that’s got nothing to do with it. This was basically just the planners forgot us. And it all came home to roost in that one year; it was like the perfect storm.
Mr. Meidel: When you look at the ‘Entertainment Tonights’ of the world and ‘Judge Judy,’ etc., they’re mega-television shows, and we weren’t getting fair market value. And it’s no different than ‘Friends’ or ‘Frasier’ or any of our other off-network shows. We have shows among ourselves in this room that overachieve most network shows outside of the top five, both demographically [and] in efficiencies and costs. And we have to make our case.
EM: Roger and Dick, you guys are absolutely terrific salespeople. Why haven’t you done the job on Madison Avenue that you should have done?
Mr. King: I was busy selling stations.
Mr. Meidel: I think Dick said it: We did take it a little bit for granted.
Mr. Robertson: We are a very active player in the first-run business. We are a very active player in the off-network business. I can tell you right now that … pretty close to half our revenue comes from barter sales.
Mr. Weiser: I think the money was rolling in for a long time and you do take that for granted because we’re really based on an industry of putting out the fires or coming up with the next great big hit. But it’s a tougher business in general to quantify for the advertisers. You have an eclectic list of stations, and you get pre-empted more than perhaps a network show. And the reporting back hasn’t been as effective as it should have been in the past to make sure those advertisers know where their spots ran. So there are some challenges that are completely over-they can be overcome. The reach, when you look at a ‘Friends’ or a ‘Seinfeld’ or any of the big shows out there, is equivalent to that of [the top] five or six cable networks combined. Just in the reach of a syndicated show. So there’s tremendous value. So I think that with work and just educating a lot of these planners, it will pay dividends for everybody.
Mr. Meidel: Cable is really good at marketing and selling their product.
Mr. Robertson: Yeah, you’ve got maybe seven or eight big syndication companies that are calling on these agencies and clients. You’ve got maybe 50 or 60 cable networks with sales staffs calling on these people. I mean just sheer numbers of faces in the waiting room in New York and Chicago, just calling on them with this channel and that channel and that channel. And a very active and well-funded [Cabletelevision Advertising Bureau]. We got outsold. We’re changing that with our new SNTA, our new commitment and Gene’s leadership.
Mr. Meidel: I think we all speak as one voice. I really do agree with Mr. Robertson. This is where we came together as an industry. … To have a common problem and to avoid the next perfect storm.
EM: Outside of ‘Friends,’ there aren’t a whole lot of things on the networks these days that compare to those shows that we’ve had in the past. So on the off-net sitcom side, it looks grim.
Mr. Perry: There’s a leveling off of eyeballs. Let’s be frank. If I told you five years ago that HBO would have a show that is beating network shows you’d say, ‘You’re nuts,’ but then you look at ‘Sopranos.’ If I told you three years ago that MTV would be putting a show on that in various episodes is lapping network shows, you’d tell me I was nuts until I brought up ‘The Osbournes.’ There’s a leveling of eyeballs out there. And what that means is you’re going to not get as many hits from one pipeline. It goes back to the pond analogy. You’re going to end up with hits on MTV, you’re going to end up with hits on CBS, on HBO, a ‘Dr. Phil’ in syndication. And you know what? You’re going to start seeing some of these smaller cablers as well with hits.
Mr. Robertson: Yeah, look at ‘Monk.’ What a great example that is. Here you are, ABC, to develop a first-run hour has to cost a zillion dollars. The chances of getting a hit is one in whatever. And here for like $300,000 or $400,000 an episode, they buy this hit off of USA Network. It’s great.
Mr. Perry: .There will be no rules. We all sat around tables like this a few years back and said, ‘Wait, MGM is gonna put a show on cable first, an action hour, and then put it into syndication? Wow, that’s mind-breaking.’ There are no rules. There are going to be no more rules. So it is incumbent upon the networks as it is and the syndicators and the cablers to do great original programming.
Mr. Weiser: You’ve really got to find different pipelines to develop those shows. It’s not just the traditional networks. And I’ll tell you, Russ Krasnoff at our company does a great job.
Mr. Perry: Look at ‘Ripley’s.’ ‘Ripley’s’ was a show that CBS wanted, and TBS outbid CBS. They didn’t outbid them by a per-episode price, but TBS stepped up with a 22-episode order and knocked CBS out of the game.
Mr. Robertson: But why do the networks have to wait for it to come off cable and go into syndication? If I was the network I’d be aggressively pursuing some of these cable hits for a shared window, like what Barry Diller does.
EM: I want to go around just once and ask everybody if there’s any issue that you want to just talk about briefly.
Mr. Perry: I think that the future of syndication will be strong if we continue to be inventive-take more swipes of the bat so that the audience has choices. And if we give the audience more choices we’ll find out what they like and we will foster more hits out of that. If we continue to give the audience less and less shows each year, we’re not going to change the percentage of the shows that work. It will be the one out of 10 or the two out of 10. It’ll take you five years to find those. So we should do more shows, do local station tests like Fox is doing. Take shows that might come off of cable and take a shot in syndication-a foreign format. Try it on a station group. Guess what? We might find that one or two out of 10 shows that works in a year or two. And then a year or two after that find some more. And it’ll be healthier for our business.
EM: Greg?
Mr. Meidel: Listen, I just think [that if] we are focused on creating great content that is rich in quality, that looks and feels good on the air, it will attract an audience. That’s what we have to do. And I think we’ve been lacking in creativity in these dayparts that have now gone to other viewing. And it’s frightening to me when I go through the overnights and I see the ‘other viewing’ column.
When I see 60 percent of the audience is going elsewhere, that’s telling me that we’re not doing the best job that we can do. So as a business, we need to put much greater emphasis on quality, how it looks, and not, as Dennis Swanson told me-you know, ‘Dr. Phil’ was the first show he’s bought in a long time that was not a work in progress on his air. We have to deliver from day one the show that they’re gonna be getting in November.
EM: Dick?
Mr. Robertson: I just think that stations need to rethink the policies of renewing programs for next year that lose 36 percent from their lead-in and are off 13 percent from last year’s time period. Stations who renew shows that are off 25 percent from their lead-in-it’s very frustrating because the economics just don’t make sense. And at some point in time, I guess
given enough time, this will correct itself. But I sometimes wonder. And we’ve had a very successful first-run division. We have lots of strips on the air; we’re developing two major talk-show strips for next year, which are going well. But it’s sort of like John Houseman in those old E.F. Hutton commercials, he has to make money the old-fashioned way. Why you would continue to take the risk of building these big infrastructures to buy from yourself when you can have a better financial arrangement, no risk, and fish in the whole pond-it really is something that I think a lot of people need to re-evaluate.
EM: John?
Mr. Weiser: In spite of all the challenges in the marketplace, the vertical integration and the cap going away and fin-syn, ever since I’ve been in the business I’ve heard every year, ‘It’s never been tougher.’ OK, then project forward: Next year’s going to be tougher. Let’s enjoy this year. And it really comes back to, as Greg said, make good TV shows. Make good product and the viewers will come. And if you’re a good partner with the TV station beyond just getting the show on the air, but really continuing to keep sight of the product and the client relationship, it’s the best way to succeed. Being an independent studio at Sony, you know, when you look at our TV and film division, this is the best year in the history of [Sony Pictures Entertainment]. So in spite of the challenges in the marketplace, stay focused on making good product and you’ll do OK.#